Israel believes EU still on board with Hamas strategy

EU transfers funds as Wolfensohn warns of PA collapse.

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Despite the EU's decision Monday to funnel some $143 million to the Palestinian Authority, Foreign Ministry officials said Israel and Europe continue to have a common Hamas strategy.
Unless Hamas recognizes Israel, disavows violence and accepts previous agreements with Israel, the EU and Israel agree that "Hamas is not a partner for dialogue or recipient of international aid," said Foreign Ministry spokesman Mark Regev.
Regev said he hoped that this "common strategic approach" would be translated into common policies. Presently Israel and the Quartet (US, EU, Russia and UN) are at odds over when funds should be halted to the PA, with Israel saying the time has already arrived, and the EU saying the time will arrive only after Hamas forms a government and if it doesn't fundamentally change its policies.
Regev's comments came the same day that the EU foreign ministers decided to funnel the funds in an attempt to stave off what Quartet envoy James Wolfensohn warned would be "the financial collapse of the PA within two weeks."
The EU package, agreed to at a meeting of the EU foreign ministers Monday in Brussels, includes $48m. to pay for the PA's energy and other utility bills, $76m. to UNRWA for health and education projects and $21m. for the PA budget to pay salaries.
European Commissioner for External Relations Benita Ferrero-Waldner said there was a firm undertaking by the acting PA finance minister that all the money would be dispersed before the incoming government takes office, so that it would not go to a Hamas-led government.
The $21m. for salaries is money that was allocated for 2005 but part of some $40m. held up in a World Bank trust fund since December because of PA financial irregularities. Ferrero-Waldner said the money was transferred because the PA had met 11 of 14 benchmarks set for its release.
The money for utility bills would be paid directly to the utility companies, said an EU spokesman, including those inside Israel.
Despite the transfer of money, Regev said once Hamas takes control, the EU has said it would cease the automatic transfer of money.
Indeed, Ferrero-Waldner said the EU was "watching political developments in the Palestinian territories very closely. How we are able to help the Palestinians in the future will depend to a large extent on the decisions taken by their newly elected government; whether its members support nonviolence, recognize Israel and stand by existing agreements."
Wolfensohn, who was asked by the Quartet principals last week to provide a report on the state of PA finances, wrote that the acting PA finance minister said he needed $60m.-$80m. next week to begin paying wages.
"The failure to pay salaries may have wide-ranging consequences not only for the Palestinian economy but also for security and stability for both the Palestinians and the Israelis," Wolfensohn wrote in his report. Approximately 135,000 Palestinians draw a paycheck from the PA, including some 60,000 security personnel.
Wolfensohn said as a result of Israel's decision to withhold tax and custom revenues, the PA faced a $260m. budget deficit for the remaining lifespan of the current caretaker government. According to PA law, a new government must be established by March 28.
The Quartet, in its statement from January 30, said it "urged measures to facilitate the work of the caretaker government to stabilize public finances." But, Wolfensohn said, not only has the financial situation not been stabilized, it has actually worsened.
He warned of a deterioration in the overall situation and said Israel should consider ways in which to stand by its decision not to support Hamas, but to find an alternative route to pay revenues, for example by helping the Palestinians pay fuel bills owed to the Israeli private sector.
Wolfensohn also called on the Arab countries "to support the PA with additional funds in the interest of general Middle East stability, given the current level of oil revenues."
He said while the short-term issues were clearly dominant, a long-term strategy needed to be developed to "ensure the government structure we have all helped the Palestinians develop over these years is maintained."
"If we don't get this right, I am afraid past investment in the Palestinian development will be lost, a Palestinian economy will not be sustainable, the Palestinian people will live off humanitarian hand-outs, and security for both Palestinians and Israelis will be in greater jeopardy than it has been for years," Wolfensohn warned.
Meanwhile, Foreign Minister Tzipi Livni is scheduled to go to London, Paris and Vienna on Wednesday and Thursday to talk, among other things, about the modalities of how to provide humanitarian aid to the Palestinians without strengthening Hamas.
One concern is that if the needs of the Palestinian population are met by international aid, then Hamas will be absolved of having to provide for their welfare, and would be able to use any money raised through taxes or from Arab countries for military purposes.
While Livni is going to Western Europe, plans for a trip to Russia have been shelved. Foreign Ministry officials denied speculation that Livni dropped plans to go to Russia in early March because a Hamas delegation was slated to go there for talks on Friday.

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